Water District Going Backwards

It all started when the golf courses wanted a long term sweetheart deal from the Virgin Valley Water District, trying to lock in water leases at $250 a share for irrigation water when the going rate paid by the Southern Nevada Water Authority for the same leases was more than $2,000 per share.

Wolf Creek Golf Course was already getting that tasty deal, one they had negotiated before the water district started auctioning their water shares to the highest bidder, which is the most fair way to distribute those shares of a limited resource.  As an aside, the attorney who put together the contract for that discount deal as the water district's legal counsel was the same attorney who also represented Wolf Creek in water matters, but he claimed there was no conflict.  Fortunately, he's no longer the water district's lawyer.

Under the auction process, minimum bids started at $300 a share, and went up from there.  Most of the time, the shares went for the $300 price, but the potential was there for higher numbers.  More importantly, if someone really needed the water, they had the chance to get it by bidding a higher price.  Again, it doesn't get much fairer than that.

In 2010, not long after every other water user in the valley got popped with a 36% rate increase, the golf courses had the gall to not only want to bypass any rate increase for irrigation water, but actually wanted a lease decrease from the $300 threshold back to the lowball rate of $250 a share.  Cherry on top?  They wanted the deeply discounted rate locked in for 10 years.

During the protracted negotiations, the water district decided to completely wipe out a water leasing program they had been using for years and years, just so they could come up with a cheaper metered program for irrigation water that would benefit the golf courses.  The greens guys jumped on it, the water district signed off, and it looked like a happily ever after for everyone except the other 18,000 water users in the valley.

As you would expect, the farmers saw that deal and wanted to know how they could get in on the savings, which included an eight-year freeze on rates.  The water district shrugged their collective shoulders, said "why not," and declared "first come, first served."

That approach might work if you're selling ice cream, but it's a horrendous idea for a rare commodity that's getting more rare and in more demand every day.  It would be like discontinuing the practice of auctioning gold futures, and declaring all gold from now on will be sold "first come, first served" at $1,000 an ounce.  A pretty unworkable idea.

A couple of months ago, the water district finally figured out that the metering idea wouldn't work, and went back to just leasing water shares for the farmers and other non-golf course users.  The only problem is that instead of reinstating the auction process, they announced it would be "first come, first served."  It was the equivalent of NASCAR's pronouncement to "have at it, boys."

Here it is, just two months later, and the catastrophe has occurred.  According to a story in the Mesquite Citizen Journal, Bunker Farms claimed they made a "verbal request" for the water back in May.  Robert Draskovich, a local resident, has been trying to lease water since April, waiting for the VVWD to make up its mind on how to distribute the water shares.  It took a while for the water district to figure out how to make an application form, so he wasn't able to fill one out until June.  Which he did.  Five days before Bunker Farms filled out and submitted theirs.

Sounds easy so far.  Draskovich got his paperwork in first, so it should go to him, right?

Not in the Good Old Boys, whisper and a handshake, arrest-and-indictment-laced world of the Virgin Valley Water District.

On Tuesday, the water district voted to lease the water to the Bunkerville boys on the basis of their "verbal request," leaving Draskovich "S.O.L." again.

All of this could have been avoided had the water district gone back to the auction-based system that had been working well for years, but that would make too much sense.  This is, after all, a quasi-governmental agency, which means their first order of business is to check their common sense at the door.

So my advice today to anyone who thinks they may need to lease water shares in the next, oh, 10 or 20 years, is to call up the water board members this afternoon, tell them you want to lease some water shares someday, and to remember that you asked first.  The good news is that, while rare water shares in 2021 will probably be going for about $10,000 each in the rest of southern Nevada, VVWD will probably still be leasing them (the water shares owned by us, the public) for around $300 a share so long as you have the right pedigree.

And if you happen to have a putting green in your back yard, be sure to mention that fact as well.  As a "golf course owner," you're almost guaranteed to get the water when you're ready, and at a nice discounted rate.